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The world's economic center is shifting with breathtaking rapidity. The trends are clear, both in the numbers and in the new realities on the ground; the general direction is from west to east and from north to south. This shift in power and influence is not only economic but also demographic, political, and cultural.

China and India

China recently passed the United States to become the world's largest economy defined in terms of gross domestic product (GDP) purchasing power parity. Although this news created only a small blip in the Western business press, it represented a historic milestone that is likely to be followed soon by other landmark events. Calculations based on market exchange rates – a more common yardstick of GDP – indicate that China will surpass the United States to become the world's undisputed economic leader by 2030.

India is also expanding rapidly; current estimates indicate that by 2050, China, the United States, and India will be the top three economies in the world.1 While China and India still have many rural and comparatively unaltered areas within their borders, their growing industrial and technological prowess as well as their higher ranking among the world's economies signify that they have officially graduated from “emerging” to “emerged.”

Europe's relative economic position is changing simultaneously. Membership in the Group of Seven (G7), an economic forum originally founded in the 1970s by the world's most industrialized countries, provides a symbolic example. Original G7 members from Europe included France, West Germany, Italy, and the United Kingdom. If the same organization were to be recreated in 2050, it would probably include no European member nations. According to current projections, there will not be a single European country whose economy is among the world's top seven by that time.2 In order to offer Europe G7 entry, it would be necessary to combine two or three countries, or perhaps all of Europe.

Humanity has witnessed these kinds of changes before. China and India previously dominated the global economy for centuries. China, for example, created revolutionary innovations such as gunpowder and printing that were later exported to Europe while supplying the Silk Road and far-reaching maritime trade routes with precious goods. Each country has approximately four times the population of the United States and more than double the number of people in Europe as a whole. Nonetheless, the ongoing recasting of global positions represents a tectonic shift in the modern economic order and is in part a transition back to the future (see Sidebar 1.1).

Sidebar 1.1 The Shifting World Center: China and India

³ China's population in 2012 was estimated at 1,377,065,000. See World Statistics Pocketbook, 2014 edition (New York: United Nations, 2014), 43; Matt Schiavenza, “A Surprising Map of the World's Population Shows Just How Big China's Population Is,” The Atlantic, August 14, 2013, www.theatlantic.com/china/archive/2013/08/a-surprising-map-of-the-world-shows-just-how-big-chinas-population-is/278691/.

⁴ Adam Minter, “China's Runaway Steel Industry,” BloombergView, September 2, 2014, www.bloombergview.com/articles/2014-09-02/china-s-runaway-steel-industry; Lydia DePillis, “U.S. Steel plants are on a layoff spree. Here's why,” Washington Post, March 16, 2015, www.washingtonpost.com/blogs/wonkblog/wp/2015/03/16/u-s-steel-plants-are-on-a-layoff-spree-heres-why/

⁵ USGS Cement Statistics 1900–2012; USGS, Mineral Industry of China 1990–2013, quoted in Bill Gates, gatesnotes, June 25, 2014, www.gatesnotes.com/About-Bill-Gates/Concrete-in-China. An estimated 45 percent of China's cement is low-grade, however, and its industry is beginning to consolidate. See also, Russell Flannery, “As the Market Hardens,” Forbes Asia, July 2015, 64.

⁶ Richard Dobbs, James Manyika, and Jonathan Woetzel, “The Four Global Forces Breaking All the Trends,” book excerpt from forthcoming publication, No Ordinary Disruption, McKinsey Global Institute, April 2015, www.mckinsey.com/insights/strategy/The_four_global_forces_breaking_all_the_trends?cid=other-eml-alt-mgi-mck-oth-1504.

⁷ Howard French, China's Second Continent: How a Million Migrants Are Building a New Empire in Africa (New York: Knopf, 2014).

⁸ Jason Chow, “China Is Now the World's Biggest Consumer of Red Wine,” Wall Street Journal, January 29, 2014, http://blogs.wsj.com/scene/2014/01/29/china-is-now-worlds-biggest-consumer-of-red-wine/.

⁹ “China Produces and Consumes Almost as Much Coal as the Rest of the World Combined,” U.S. Energy Information Administration, May 14, 2014, www.eia.gov/todayinenergy/detail.cfm?id=16271.

¹⁰ United Nations, Department of Economic and Social Affairs, World Population Prospects: 2012 Revision, June 2013, http://esa.un.org/unpd/wpp/index.htm, 43.

¹¹ “An Indian Summary,” The Economist, www.economist.com/content/indian-summary.

¹² “Wasting Time,” The Economist, May 11, 2013, www.economist.com/news/briefing/21577373-india-will-soon-have-fifth-worlds-working-age-population-it-urgently-needs-provide.

¹³ “India Overview,” World Bank, www.worldbank.org/en/country/india/overview.

¹⁴ U.S. Energy Information Administration.

¹⁵ Hawksworth and Chan, “The World in 2050. 2.

Personal Consequences

The world's shifting economic center has vast implications for almost everyone, particularly those who have been at the top and at the bottom of the global economic order. During the past century, U.S. and European leadership and business models largely dominated multinational corporate cultures. The economic shift toward markets such as China and India means that these countries and their leaders will increasingly shape the way business is conducted.

New leaders from Asia and elsewhere will need to consider their own core values and vision for the future and how they can inspire their global colleagues. Beyond material success, what will make their careers fulfilling and worthwhile? If current or aspiring leaders from Europe and North America go on with business as usual – assuming that their privileged position will last forever – they risk looking like human ostriches, heads buried in the sand to avoid the speeding freight train of globalization. Rather, they must embrace the planet's inexorable tilt toward rising economies and learn how to succeed together with employees from around the world who want to be treated as full partners. Sometimes the consequences are very personal, and one's career can take an unexpected turn.

Promotion Postponed

Ingrid speaks in quick spurts over the phone from her office in London, where she has just returned after three years in India. She is Swedish, but started her career with a company in New York and then moved to London, so her accent is hard to place. Ingrid is in her mid-30s, works for one of the world's most famous banks, and saw the opportunity to move to Bangalore and gain international experience as critical for her career.

Ingrid comments, “I had just completed my first year in Bangalore and had a perfect performance rating. I was on the list to get VP, but then, three days before the promotion lists were finalized, I was pulled off the list and no one could tell me why.

“This really impacted my engagement. There were so many times when I just wanted to leave, especially during my third year in Bangalore. To be honest, I called my contacts in London and said that they needed to find me a position back in the U.K. or I was going to look at other opportunities.

“I realize now that there were a lot of things going on under the surface that no one talked about. The plan when we originally went into India was to outsource business processes to cut costs, and it was cheaper initially. Then we started to move India from an outsourcing center into a more strategic role, with business and revenue driven out of the Bangalore office. It is now its own entity, and the bank just celebrated 10 years in India. The goal of this more strategic positioning was to gain better access to India's talent pool. While the initial objective was to employ cheap talent, people are actually paid very well now – even by the bank's London standards.

“Part of the reason I was passed up for promotion was about wanting to build a local leadership model in India, as a retention strategy and as part of a broader global strategy generally. Because my contract in India was three years, the company had at least another year to convince me to stay. I think that they took the risk to give my promotion to someone in India because they were getting a lot of pushback regarding all the expats in Bangalore. Local nationals were saying, ‘Why do we need all these expats coming in to oversee everything?’ It was better to sacrifice my promotion to address this and then try to reengage and offer me a promotion during the last year of my contract.

“But now I have a bit of a different view of all the expats in Bangalore. These people go back with a broader perspective, so their time in India might also educate them about the country. They can bring that new perspective with them wherever they go next in the world. Having returned here to London, I am asking why people are not involving their Indian team members more. I work to give these newer members of the team a voice because I know how capable they are. The further west you move, from London to New York, it seems the less understanding there is about how serious we are about the Asia-Pacific region.”

Ingrid's experience is likely to become increasingly common as companies seek to expand their leadership talent pool. Her career prospects are still bright, even though her promotion was delayed by a year or two. She is now distinguishing herself through a different kind of role. Based on her knowledge of both India and London, as well as her strong personal network, she is able to draw out the full strengths of her team members to accomplish joint projects, a skill that is very important to her employer. People who join a global organization today and aspire to a leadership position should consider how they can best contribute as the center shifts (see Sidebar 1.2).

Sidebar 1.2 What about Me?

Many individuals are concerned about the impact of cross-border commerce and migration on their careers and personal lives. Regardless of where they are currently living, they face many common – and sometimes deeply personal – challenges, asking themselves questions like:

● What can I do to advance my own career prospects and to make a more secure and prosperous life for myself and my family?

● Will I be able to compete with other employees or people in rival firms who may have more education or better skills, or who are hungry enough to work even longer hours than I do already?

● Does my employer appear to favor some individuals based on their personal background or nationality, and how can I best respond to this?

● Will I be able to understand and to work well with colleagues who were raised in a different culture, speak other languages, and perhaps belong to a different religion?

● How can I comprehend the needs of faraway customers and create products they will buy?

● How can I afford to educate my children well and prepare them for an increasingly competitive world?

● What will happen to my personal life if communication across time zones requires additional hours from my early mornings and late evenings or if I have to travel more and work harder? Can I still be present with my children while they are young, take care of aging parents, and keep my marriage intact?

The best approach to most of these questions is to clearly grasp the changes that are on the way and to cultivate the skills that you and your family will need to survive and prosper. The purpose of this book is to help people from any country succeed in this changing environment.

More Countries on the Way

Change is occurring in other places that could affect the careers of Ingrid and her colleagues. Although China and India are the biggest players in the shifting global economy, a number of locations in Asia, the Middle East, South America, and Africa continue to grow rapidly. Countries like Turkey, Malaysia, and Poland are already or soon will be among the ranks of the emerged nations.

Trend lines seldom remain constant over time, and unpredictable events occur: natural disasters, civil unrest, war, disease, economic crises. The BRIC (Brazil, Russia, India, China) countries were once touted as the growth economies of the future, but Brazil and Russia have both since experienced economic turmoil and stagnation. Even China's once torrid double-digit growth has slowed to single digits and what its government is calling the “new normal,” although this is still double or triple the growth rates in the United States and Europe. And, as many companies that invested in Russia have discovered, geopolitics can scuttle once-promising trends. Investing in Russia seemed like a fine idea based on its size and market potential when the BRIC acronym was coined, but the country has turned out to be a far riskier place for investors than many predicted.3 Corrupt governments, poor infrastructure, and limited educational opportunities also hold back development in many locations.

Such caveats notwithstanding, the general trajectory from west to east and north to south has been in place for decades. Projected global population growth of at least two billion more people, almost all outside of the developed world, suggests that this trend will continue. One calculation places the global economy's center of gravity in 2050 between India and China, or more than 5,000 miles east of where it was in 1980.4 Carlos Ghosn, renowned CEO of automaker Renault-Nissan, remarks, “Growth is going to come from new markets – we all know China, India, the Middle East, South America – but also from the countries of the future, which are going to be the next wave coming.”5 In particular, projections based on population and/or natural resources often point to countries such as Mexico, Indonesia, Nigeria, Turkey, Vietnam, Iran, Egypt, Colombia, and the Philippines. Acronym lovers undeterred by the mixed performance of the BRIC nations now refer to the first four of these as the MINT countries.6 Their continued growth will require further investments in infrastructure along with ongoing social and political reform, and some will be more successful at harnessing their potential than others.

While the future will undoubtedly bring surprises as well as further developments based on existing trends, Ingrid and others are beginning to experience a new world with many centers and a fracturing of previous lines of power, investment, technology transfer, and political authority. Dozens of regional economic hubs are bursting with activity and rapid development. The largest cities on the planet now include Beijing, Mumbai, Lagos, Chongqing, Jakarta, São Paulo, Karachi, and Mexico City, with more on the way. Two-thirds of global economic growth is being driven by cities in the developing world; there will be approximately 370 new cities of over half a million people by 2030.7 Asian consumers are also increasingly shaping demand, and within 15 years will account for a significant majority of both the global middle class population and of worldwide consumption.8

Cutting-edge technological advances are as likely to be visible in newly emerged locations as in renowned centers of innovation. Infrastructure in many Chinese cities, for example, is often more advanced than in Silicon Valley – skyscrapers, bullet trains, subways, and cell phone connections are all more modern and efficient. It has become common in many locations, including parts of Africa, to leapfrog whole generations of technology, for example, by skipping the installation of landlines for telephones and the build-out of a nationwide retail banking infrastructure, and instead moving straight to e-commerce via cell phone. Top talent, too, can come from previously untapped sources, as Ingrid's bank is learning. Workers in an ever greater number of professions must both collaborate and compete with colleagues from other continents.

Under New Ownership

Western firms have been scrambling to augment their presence in global markets, where they are anticipating further growth. They encounter rival enterprises that were once primarily local, but which have now expanded beyond their home markets to compete with fellow multinationals worldwide. Huawei competes fiercely with Cisco, Lenovo with Hewlett-Packard, Hyundai with Ford, Emirates with British Airways, SABIC (Saudi Arabian Basic Industries) with Germany's chemical giant BASF, and Tata Consultancy Services with Accenture.

This trend is gathering momentum: McKinsey estimates that whereas 95 percent of the Fortune Global 500 was headquartered in the developed world in the year 2000, by 2025 almost half of the world's companies with a billion dollars or more in revenue will be headquartered in other markets.9 Due to rapid growth, along with mergers and acquisitions, leading global enterprises in economic sectors once integral to Western technological prowess now have owners based in Asia, the Middle East, and South America (see Sidebar 1.3).

Sidebar 1.3 Major Industries: Leading Global Enterprises

● Steel: ArcelorMittal (India), BaoSteel (China)

● Mining: Vale S.A. (Brazil)

● Shipbuilding: Hyundai (South Korea)

● Oil Production: Saudi Aramco (Saudi Arabia)

● Automobiles: Toyota (Japan), Hyundai (South Korea)

● Personal Computers: Lenovo (China)

● Cell Phones: Samsung (South Korea)

● Food Processing: JBS S.A. (Brazil)